RBA Keeps Interest Rate at 3.60% Amid Surging Inflation & Rising Property Prices

At its policy meeting on November 4, 2025, the Reserve Bank of Australia (RBA) decided to keep the cash rate target unchanged at 3.60%, opting for neither a rate cut nor a hike. The decision was driven by an unexpected surge in inflation in the third quarter and renewed strength in the property market.

Latest Economic Context

• Core inflation (trimmed mean) rose to 3.0% YoY in the September 2025 quarter, exceeding previous expectations (~2.7%).

• Headline inflation also climbed to around 3.2% YoY in the same quarter.

• Australia’s property market has shown a renewed rise in house prices and construction costs, indicating that earlier credit stimulus and monetary easing are beginning to take effect.

• The labor market remains relatively tight: although the unemployment rate ticked up slightly (to ~4.5% in September from ~4.3% in August), labor underutilization and business surveys point to ongoing labor shortages.
  

Reasons Behind RBA’s Decision to Hold Rates

• Higher-than-expected inflation: The RBA noted that the recent price pressures suggest the output gap between demand and supply in the economy is smaller than previously estimated.

• Strengthening property market: Rising home prices and a rebound in construction activity could add further inflationary pressure through household spending and the housing/rental sector.

• Data-dependent policy stance: The RBA emphasized it has no preset bias toward rate cuts or hikes, instead choosing to wait for incoming data on inflation, the labor market, and household conditions.

• Interest rate near neutral: The RBA stated that the current 3.60% cash rate may already be “a little restrictive or might be close to neutral” in the context of the current economy.
  
  

Implications for AUD, Financial Markets & Property

• AUD/FX:
  Since the RBA held rates and signaled that further rate cuts are less likely, the Australian dollar (AUD) could gain relative to currencies facing faster rate-cut prospects. However, global factors such as USD safe-haven flows or external shocks remain influential.

• Bonds & Yield Curve:
  With the outlook for rate cuts now less certain, short-term bond yields are unlikely to fall sharply. The yield curve may remain flat or slightly steepen if markets perceive ongoing inflation risks.

• Property & Household Credit:
  Keeping rates steady means loan repayment burdens will not ease, which could strain indebted households. However, the rise in home prices boosts household wealth, potentially supporting consumption but also raising the risk of a local property bubble.

• Traders & Analysts:
  Currency and bond traders should closely monitor upcoming inflation data (monthly CPI), labor market surveys, house price indices, and any shifts in the RBA’s forward guidance. The RBA’s “meeting by meeting” communication approach suggests that market volatility could increase whenever data deviates from expectations.
  
  

Technical Analysis

AUDUSD H4

Broadly speaking, AUDUSD is now approaching a support area and has begun to show signs of reversal. It is advisable to wait for the price to form a market structure and establish a higher low to confirm a trend reversal. The MACD indicator has not yet shown strong upward momentum.

AUDCAD H4

AUDCAD looks more interesting. Although it is still moving within a consolidation range, the overall trend remains relatively stable. A buy position could be considered if the price successfully breaks above the resistance area.

Conclusion

The Reserve Bank of Australia’s decision to keep the interest rate at 3.60% underscores that the monetary tightening phase is not yet completely over.

On one hand, persistently high inflation prevents the RBA from easing policy too soon. On the other hand, rising property prices and household pressures highlight an increasingly complex balancing act.

Looking ahead, the market’s main focus will be on fourth-quarter inflation and housing price data as key signals for the next policy direction.

For investors and market participants, this is a time to remain selective, disciplined, and responsive to new economic data, as each data release could shift expectations regarding the interest rate outlook and the movement of the Australian dollar.